China: The Advantages And Disadvantages of International Trade Essay

Inter areaal trade has always been an attractive caprice for merchants and logical argumentman since time immemorial. There is always an opportunity to sell more, make more profits, append the martplace share, remove seasonality fluctuations of command and supply, increase in merchandiseivity, and of course a business or even a country learns a lot on the product development technologies and strategies from doing business with other countries or regions. muckle as well as leads to higher GDP, better and more choices of products for consumers, increase in competition in domestic market leads to warring prices which is good for consumers, competition overly leads to better quality in goods and services, and reduces un booking and poverty. Thus, this leads to growth and maturing of a countries providence as a whole and also the businesses involved.Trade also leads to some problems that are not that axiomatic at the onset of trade. Even though trade tends to increase employm ent in one nation it may lead to job cuts in another. As businesses shift manufacturing for instance from abundanter nations to third world or developing nations, they take payoff of the cheap struggle, rachiticer labor policies, weaker environmental policies, and support of the organizations in these countries. They are fitted to recruit more and thus produce more for less. scarcely this leads to job cuts in the parent rich nations. Trade also leads to job cuts in the developing and third world countries due to competition with multinationals from develop nations and also due to photo to automation and modernization. Many businesses cannot put up with high productivity and competitive pricing of stronger businesses from richer nations and thus finally may lead to closing down of weaker businesses and unemployment in the face of competition.But we also pull in to realize that employment also increases through the new businesses from the richer nations. Overall there is a po tential increase in employment. There is a problem of increasing income inequalities in chinaware. As the business houses tend to take advantage of weaker policies in labor and environment, there will be environmental pollution leading to health and environmental complications further labor discrimination leading to weaker social well-being. Businesses furcateicularly also need to realize that protection of Intellectual property rights may not be recognized or understood or at least weak in some of the nations thus, leading to piracy, copyright violations, patents violations, product copies etc. This may well erode the competitive advantage, and the brand image of businesses.The above comments on external trade can be closely associated with the international trade involving china. china has become the manufacturing hub of the world. Substantial part of the sparing of China depends on international trade. The advantages it gives for other countries to setup manufacturing plant s in China is its strong government support for FDIs, Infrastructure development, cheap labor, weak environment and labor laws, new strong market snuff it which includes China, India, Japan, Russia, Korea, Thailand, Vietnam, Indonesia, Malaysia etc, access to cheap Chinese supplier base, thus coarser sales and profits, seasonality of product supply and carry can be managed (one can always sell the product in China and the markets close to it if the charter is lower in North America or Europe). US has profited considerably through trade with China. gross revenue of products from US have grown in popularity in China boosting US multinationals (Expanded trade with China has, in fact, been a blessing for large U.S. multinationals bid Boeing, Caterpillar, and Cargill, which had trumpeted the prospect of a massive Chinese market for American products and services.China is the worlds fastest growing market for commercial aviation, and needs billions of dollars worth of airplanes from Boeing. Its growing infrastructure has been a boon for companies like Caterpillar, which produces tractors and other heavy equipment. And it is importing billions of dollars worth of farm products, a boon to companies like Cargill. Last year, China bought $2.9 billion worth of soybeans the top U.S. export crop to China. China also has proven to be a growing market for U.S.-made fertilizer and chemicals.). Chinas benefits were as follows its economy has been growing at a very rapid rate (for instance, Chinas economy grew at an average rate of 10% per year during the period 1990-2004, the highest growth rate in the world.), the resulting increase in business activity drastically reduced poverty (China has been credited for greatly lowering the persona of East Asian population living in poverty in a recent piece Bank report from 80% to 18% in a span of 20 years), created employment (Foreign coronation funds remains a strong element in Chinas rapid expansion in world trade and has been an important factor in the growth of urban jobs.), saw a large growth in cities (population 30% urban in 1950, estimated 60% urban in 2030, 19 mega-cities 10 million, 22 cities with 5 with 10 million, 370 cities with 1 to 5 million, 440 cities with 0.5 to 1 million), increased the technology and business exposure of domestic firms and the countries technological expertise (China has acquired some highly sophisticated production facilities through trade and also has built a number of advanced engineering plants cap adapted of manufacturing an increasing puke of sophisticated equipment, including atomic weapons and satellites.)Making the firms and the country more competitive, increased the variety of products available to the consumers, domestic manufacturers matured and increased competition in local market (e.g. Shanghai motors), prices became competitive, Chinese suppliers matured enough to support the big multinationals (e.g. Toyota, GM) in Japan and China, trade has hel ped Chinese government earn huge revenues due to trade that helps to increase investment in public welfare and social infrastructure, thus increasing the overall well being of China, China is also exporting and importing to and from many countries respectively thus, it is able to manage seasonality in the supply and demand of the products involved by diverting exports (Cheap Chinese goods export to South Asian, and South East Asian markets) and transmutation sources of imports (Crude oil from African (e.g. Chad and Darfur), South America (e.g. Venezuela) and Middle-east (e.g. Iran) countries) as and when required, in the process China is also able to reduce dependence on any single country. Chinese exports is around $1216 billion (2007) to countries as US 21.0%, EU 18.1%, Hong Kong 17.0%, Japan 12.4%, ASEAN 7.2%, South Korea 4.7% (2004) while its imports is around $953.9 billion (2007) from Japan 16.8%, EU 12.4%, ASEAN 11.2%, South Korea 11.1%, US 7.9%, Russia 2.2% (2004).However, in spite of the many positives of international trade there have been less obvious problems in the form of labor discrimination (86 percent said discrimination exists in Chinas employment market 51 percent see the discrimination as serious. Chinas employee market is deplorably inefficient and small foreign companies are very well positioned to take advantage of this., even multinationals like Reebok have been found guilty of labor discrimination and of taking unfair advantage of weak labor policies. Even local firms are taking such advantages), environmental problems (State Environmental Protection Administration (SEPA) announce that 130 foreign companies did not comply with current environmental laws.In fact, many multinationals see weak environmental laws as a means for cost reduction and therefore maintain different environmental standards in China than in their home countries. Multinationals can pollute more in China principally because of an incomplete regulation system and loose supervision with few penalties that lead to a low inducing for keeping to the environmental law.), and legal problems for firms in the areas of protection of Intellectual Property Rights in China (There is itsy-bitsy awareness that infringement is a crime in China. Growth of new businesses has outpaced the governments major power to regulate them).Trade has fired competition which in turn has pushed many of the multinationals and domestic firms to take advantage of limited media rights, weak labor policies and implementation, and weak environmental policies and implementation (90 multinationals that have been found by the environmental protection authorities to have violated water pollution regulations since 2004, Forbes reports. General Motors, Samsung, Unilever, Pepsi and Yum Brands chains Kentucky Fried squawker and Pizza Hut are just a few of the companies on the list, concord to the article.).Both the US and China has suffered job cuts. China is losing millions of m anufacturing jobs due to automation and the adoption of new business systems and production techniques, according to The Conference Board in New York. Between 1995 and 2002, 15 million manufacturing jobs were lost in China, or about 15 percent of the total manufacturing workforce, The Conference Board found after working with Chinas National Bureau of Statistics. Manufacturing employment in China fell from 98 million in 1995 to 83 million in 2002. By comparison, the United States now has 14.5 million workers in the manufacturing sector, about 3 million less than in 1999.Trade does have enormous benefits but not without some corrections required and some inevitable losses in the form of job cuts. The job cuts can be corrected though with appropriate training of the unemployed to take up jobs requiring higher skills. Countries belonging to the OECD have attempted methods and policies to reduce the unemployment created through the effect of trade. Denmark for instance cut its unemploy ment from about 10 percent in the early 1990s to less than 5 percent now.The main ingredient for the Danish success is a system called flexicurity, a set of liberal policies for hiring and firing, allowing relatively frictionless adjustment to shocks caused by international trade. A generous system of carefully monitored unemployment benefits and funding for retraining displaced workers complement Denmarks labor-market flexibility. Governments have a range of policies to expand trade while minimizing the loss of jobs. However, a complete solution to the losses from trade is monstrous and like always not fully repairable.